A home loan is basically one of the crucial decisions in one’s life, as it can be exhausting and stressful if an applicant fails to conduct proper research before signing the dotted line. With a good range of options and offers available in the market today, it is relatively simple to take a home loan from lenders like PNB Housing Loan at attractive PNB Housing interest rates or at lower rates offered by other lenders.
However, what happens if you make the decision of taking a PNB Housing Loan or home loan with other lenders much later in your life? It is extremely significant as you grow older; it becomes a little difficult with PSUs and various other private banks imposing certain restrictions. Basically, lenders evaluate your financial conditions, majorly your income and also your home loan EMI repayment capacity, before approving your application.
For instance, those individuals who are in their 20s or 30s can get their home loan for a maximum home loan repayment tenure of up to 30 years. It is because they can comfortably repay their home loan borrowed from PNB Housing Loan or any other lender during their active working years. But if they avail of a home loan in their 40s, then they require repaying the same over a shorter repayment tenure of 15 to 20 years or till they reach their retirement. In the absence of their regular income, they might find it tough to repay their balance home loan amount. Few HFCs may extend their repayment tenure beyond the age of 60 based upon their repayment capacity and creditworthiness.
Here, we will state stepwise procedure as to how those in their 40s can avail of home loan:
Add in a co-applicant
The presence of lesser working years is one of the major reasons for few of the lenders like PNB Housing Loan to turn down home loan applications of those in their 40s. One of the prudent ways to overcome this issue is by selecting a co-applicant for a home loan who should be an earning member having a better credit profile and stable income. While adding a co-applicant will not result in boosting your eligibility by a massive margin, it will endow a little push towards ameliorating your home loan approval chances. Note that as the age of the primary borrower is high, the repayment tenure offered by most of the lenders might be less.
However, including a co-applicant will help the borrowers in getting a higher loan amount. But remember that any sort of default or delay in home loan repayment will negatively impact the credit score of both the co-borrower and primary borrower.
Opt for a lower LTV ratio
LTV ratio, also known as loan to value ratio, refers to the proportion of the value of a property that is sanctioned in the form of a loan by lenders. As per the guidelines set by RBI, lenders can offer a maximum LTV of up to 75 to 90 % basis of the cost of the property. This ratio gets fixed by the lender’s assessment of the applicant’s credit risk profile, implying that loan borrowers who appear less creditworthy are usually offered a lower LTV ratio.
Loan borrowers can enhance their home loan eligibility by contributing a higher amount from their own funds in the form of a down payment. Opting for a higher down payment for a home loan automatically lowers your LTV ratio and also reduces the required loan amount size.
Assess EMI affordability
Individuals approaching retirement or those who have already retired can easily calculate their EMI using an online home loan EMI calculator. Using the calculator allows one to know the monthly cash flow for a home loan. By getting a rough estimate, you would get a better understanding of the fund outgo and apply for the loan accordingly as per your repayment capacity. To calculate the EMI amount, one requires putting in basic details like loan amount, interest rate, loan tenure, and down payment in the calculator.
Note, bigger EMI leads to shorter tenure and lower interest costs, while smaller EMI results in longer tenure and higher interest costs. When deciding EMI affordability, borrowers should also factor in their monthly contributions for crucial financial goals, if any. Doing so not only enhances your loan approval chances it also lowers your chances of EMI defaults owing to aggressive repayment schedules and ensures financial health.
Limit your loan applications
Whenever an individual applies for any loan or credit card, the lender fetches his credit report from the credit bureau to examine his creditworthiness. Such requests for credit reports are said to be hard inquiries, which lower the credit score of the individual by a few points—making multiple credit inquiries in a short span of time results in faster depletion of credit score, which in turn lowers your eligibility for home loans at preferable interest rates.
In place of rising home loan inquiries directly with lenders, applicants should visit online financial marketplaces for comparing and selecting the best home loan options as per their eligibility and financial requirement. While such marketplaces will also fetch credit reports for offering loan options, requests for credit reports raised by them are said to be soft inquiries, which do not affect your credit score in any way.
Ensure to maintain a good credit score
When evaluating your application for a home loan, the key parameter considered by lenders like PNB Housing Loan is your credit score which reveals your creditworthiness. A strong credit score of 750 and above certainly enhances your chances of loan approval, as it discloses responsible and disciplined handling of finances. Besides increasing your home loan eligibility, a strong score also helps consumers to get lower PNB Housing Loan Interest rates or a lower rate of interest from other lenders.
Thus, ensure to avail your credit report either through credit bureaus heads or online financial markets before you submit your application for a home loan. Opting for this route helps you recognize wrong transactions or any discrepancies present in your credit report, which you can report to the bureaus or lenders for rectification. A corrected credit report can automatically lead to a higher credit score, which further increases your chances for a home loan.